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Rhule said in yesterday's PC that the Husker spring game tomorrow will run NFL clock rules

So, in effect, this levels out the playing field, right (or close to it).  It makes being credit worthy less valuable.

Levels?   I guess it depends on your opinion.  
 
before- there was financial incentive- as far as loan rates-for people who pay their bills  and save their money.   

Now there is not nearly as much- and in some scenarios it is penalized.  The recipients of that penalty are those with much lower credit scores and little money saved.  

You think that’s level?   What do you think will be the longer term impact on consumer priorities and behavior?

yup, those that are prudent make mortgage payments on time with less chance of default

those that are not?
the lender will have to deal with them

Let me also add this.

Virtually every bank in this country has a loan program specifically for borrowers who are low to moderate income or are buying in load of moderate income census tracts.   

Lower interest rate, hundred percent loan to value or even more so the borrower does not need to bring any funds to the table, much lower underwriting standards as far as that income, complete waiver of fees in some cases or even granting closing costs from the banks pocket to the borrower. 

The banks cannot find enough people to take these loans. They are fighting literally for any client that fits this profile because they are held accountable by the regulatory agencies to make a certain amount of these type of loans.


They hold these loans in their portfolio so don’t necessarily have to worry about Freddie Mac and Fannie Mae pricing and underwriting rules. They Just accept the fact that these are much higher risk loans and will be written off as bank losses at a much higher clip.  


Go to any banks website and do a search on affordable home lending and you will see what I am talking about

In Miami- using this example because it is Close by and I am very familiar with it- you can buy a $400,000 house, with no money down, and get up to three down payment assistance grants totaling $200,000.  You don’t have to have any money and you don’t have to have a good credit score. You just have to fit the right profile.  

Lemme see if I understand this with a crude example.  We take two families, one with great credit, one without, who apply for a loan.  The first family is in a group with say 1% default rate, the other with 30% default rate.  In a "normal market", the former might get offered say 5% and the latter 6%.

Now, the former would pay say 5.35% and the latter 5.55%, sort of leveling the playing field.  This would also mean more folks in the latter could get the loan, and fewer in the former.  This would lead to more defaults.  I guess if they pass them off to Fannie and Fredowski, the gubmint will cover the losses.

Lemme see if I understand this with a crude example.  We take two families, one with great credit, one without, who apply for a loan.  The first family is in a group with say 1% default rate, the other with 30% default rate.  In a "normal market", the former might get offered say 5% and the latter 6%.

Now, the former would pay say 5.35% and the latter 5.55%, sort of leveling the playing field.  This would also mean more folks in the latter could get the loan, and fewer in the former.  This would lead to more defaults.  I guess if they pass them off to Fannie and Fredowski, the gubmint will cover the losses.

A couple of things:

- remember, When it comes to paying for things you and me and all of us are the “government”
- the example you cited is not accurate.  In the before world, the family withe the good credit score was willing to put 30% down in exchange for an even lower rate- say 4.75. In todays world they will not get that enticement and in fact will have their rate moved from 5 to 5.375. If they decide against the bigger down payment they are now in the 3% default group - even though they could have moved to the .5% default group before and saved $200 a month for their kids college fund.

The family with the bad credit and lack of downpayment was going to get that 6% before- if the qualified. ( Stable source of income and assets in reserve to cover 6 months of payments in an emergency).  They too could get that rate down to 5.75 if they put say 10% down.  In the new world the get there by putting less down. Now- even though they get a better rate/ their payments are higher. And gues what the # 1 predictor of default on mortgages is?    LTV.  People with less equity in their home are exponentially more likely to walk away from it. So now- they are in the 35% default rate. So- have we really done them a favor? We have stretch their cash flow even more in a situation where they are already having trouble making payments and saving money. And we did that at the expense of a good borrower with good credit and savings in the bank. 

I know your MO is to say everything is really not that big of a deal.  If you understood the mechanics of how this works ( nobody would expect you to) you would see that this harmful in many ways, and will further erode the concept of meritocracy. 

most government ideas of making things better don't achieve the desired results

ideas from Biden's office seem to be less effective than most